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HMRC internal manual

Capital Gains Manual

Goodwill: goodwill ceasing to exist: TCGA92/S24(1)

TCGA92/S24(1) provides that the occasion of the entire loss, destruction, dissipation or extinction of an asset shall constitute a disposal for CG purposes.

If a person ceases to carry on a business without disposing of it as a going concern any goodwill in that business may be presumed to have ceased to exist provided that the cessation is permanent. A loss may therefore arise by reference to the original cost of goodwill, if any, or its 31 March 1982 market value as appropriate.

If, however, the suspension of the business is a temporary measure we would consider that goodwill continues to exist pending a recommencement of business activities. Where no positive decision is made to cease trading permanently we would not accept that TCGA92/S24(1) applies to deem a disposal of goodwill.

A deemed disposal under TCGA92/S24(1) occurs at the date of cessation and there are no provisions for any loss to be treated as accruing at an earlier date.

TCGA92/S24(1) and TCGA92/S24(2) are mutually exclusive. A claim under TCGA92/S24(2) that goodwill has become of negligible value cannot be made on or after the permanent cessation of a business for the reasons given at CG68080.